Monitoring International Labor Standards: Summary of Domestic Forums (2003)

Ten participants provided the perspective of nongovernmental organizations (NGOs) that focus on human/labor rights, monitoring corporate adherence to codes of conduct, and investor efforts to alter corporate behavior. Mila Rosenthal represented the Lawyers Committee for Human Rights; Carol Pier, Human Rights Watch; Bipul Chattopadhyay, Consumer Unity & Trust Society; David Schilling, Interfaith Center on Corporate Responsibility; Tom Hayden, the Campaign for the Abolition of Sweatshops and Child Labor; Garrett Brown, Maquiladora Health and Safety Support Network; Stephen Coats, U.S./Labor Education in the Americas Project; Dennis Smith, Commission for the Verification of Corporate Codes of Conduct; May Wong and Aewha Kim, Asia Monitor Resource Center; and Pharis J. Harvey, International Labor Rights Fund.

Mila Rosenthal, presenter

The Lawyers Committee for Human Rights (LCHR), founded in 1978, works in the United States and abroad to create a secure and humane world by advancing justice, human dignity, and respect for the rule of law. LCHR supports human rights activists who fight for basic freedoms and peaceful change at the local level; promotes fair economic practices by cre

ating safeguards for workers’ rights; and helps build a strong international system of justice and accountability for the worst human rights crimes.

Ms. Rosenthal stated that there are many difficulties associated with monitoring the core labor standards, and these have been set forth in the numerous papers that the committee has received. Different methodologies for collecting data, the variety of systems for monitoring compliance, the breadth of indicators to be used, and the complexity introduced by sectoral, regional, ownership, and management differences create a situation in which it would be nearly impossible to aggregate the data into a unified system of ranking countries. To illustrate this point, Ms. Rosenthal gave a detailed account of her research into the labor conditions in the textile, garment, and footwear industries in Vietnam. Vietnam has a mixed economy with privately owned plants competing against those still owned by the state. Working conditions vary depending on the ownership structure and geographic location of facilities, but the variations are not consistent; for example, workers in different state-owned factories can have very different labor standards applied to their workplaces, just the opposite of what one would expect.

Vietnam presents a case study of the difficulties inherent in assessing compliance with core ILS. For example, there is little evidence that child labor is systematically used in factory work, but it does exist in home work and piecework (work that is compensated according to the number of pieces produced) in the informal economy. A recent report by UNICEF (United Nations Children’s Fund) on Vietnam’s compliance with international child rights standards concluded that there is no serious problem. Yet according to Ms. Rosenthal’s presentation, child labor clearly exists in Vietnam, and this raises the question of how this situation would be handled in the proposed National Academies database. Furthermore, by International Labour Organization (ILO) standards, Vietnam is almost exemplary in its compliance with core labor rights, with the one huge exception being freedom of association and the right to collective bargaining; again, how would this be dealt with in the database? Finally, Ms. Rosenthal pointed out that there are significant regional differences that would necessitate careful analysis of labor issues in the north, south, and mountainous areas of the country, and it’s not clear how these different perspectives could be combined into an overall rating of Vietnam.

Nevertheless, this does not mean that the database is not a worthwhile project, one that has the potential to assist everyone seeking better compliance with core labor standards around the world. But the expectations of the project should be modest in light of the many difficulties involved. From the perspective of the LCHR, the basic objective of the Department of Labor should be to enhance the role of national authorities in enforcing labor rights. It should not be to rank countries according to an index derived for the proposed database.

Carol Pier, presenter

Human Rights Watch (HRW), founded in 1978, is the largest human rights organization based in the United States. HRW’s 150 professional researchers conduct fact-finding investigations into human rights abuses in all regions of the world. HRW does not accept government funding but depends on donations from private foundations and individuals.

Although still focused on the traditional human rights agenda of investigating torture, denial of due process, disappearances, and arbitrary imprisonment, HRW recently expanded its activities to include labor rights abuses. Because international law provides the framework for its investigations—and not internal or external corporate codes of conduct—and because the primary objective of HRW is to influence governments to adopt and enforce international labor standards, HRW focuses its labor rights analyses on governments rather than on a single company. However, even though private corporations are not directly regulated by international law, as part of a broader analysis of the efforts of governments to abide by their international commitments to protect and promote workers’ rights, HRW documents the failure of employers to uphold ILS.

The process begins with the selection of a country and an industry sector as the focal point of the investigation. The methodology of HRW is fairly simple and matches that used to investigate human rights abuses— personal interviews and written documentation. HRW endeavors to interview as many interested parties as possible, including current and former workers, government officials, company and trade union representatives, local NGO personnel, local labor activists, and officials of international institutions. Not surprisingly, workers and local groups are usually the best sources of information. Worker interviews are best conducted off-site, but this creates logistical and legitimacy issues. It is difficult to locate workers away from the workplace, and they are often afraid to talk because of employer threats of reprisal. Evidence gathered through this method has some

times been challenged on the basis that HRW’s personnel do not enter the workplace (and thus do not directly observe the workplace setting) and that the information gathered is not easily reproducible and is based on individual recollection, which is subject to bias.

To illustrate the methodology of fact-gathering used by HRW, Ms. Rosenthal described two investigations: one covered migrant domestic workers in the United States, and the other, banana workers in Ecuador. Ms. Pier’s investigation of migrant domestic workers led her to strongly recommend to the National Academies that the database include monitoring of the informal economy. Because of the “hidden” nature of the work, this is where the greatest exploitation and labor rights abuses take place. Child labor is often involved in informal economy work, and thus not including this economy in the database would diminish its accuracy and relevance. Of course, the informal economy is extremely difficult to measure and monitor—and nearly impossible without either conducting onsite investigations or relying on local groups for data and information, or both. Informal economy workers are not members of unions, and very few, if any, unions have attempted to organize this economy in any country. In addition, most informal economy work takes place in private homes, and thus the workers are inaccessible.

The investigation of the banana industry in Ecuador was spurred by reports of child labor and widespread labor rights abuses. Although numerous labor rights violations were uncovered, from the perspective of the work of this committee, perhaps the most important violations involved freedom of association. Ecuador is the largest banana-exporting country in the world, and yet the unionization rate is less than 1percent. At the time of the investigation in 2001, there had not been an aggressive union organizing drive in more than five years. This was because of a climate of fear among workers, but trying to provide evidence of this is much more difficult than documenting blatant anti-union activity. The latter is indicated by mass firings of union members or organizers and anti-union violence, for example, but none of these were occurring in Ecuador’s banana sector because there was little attempt at union activity. This climate of fear existed because Ecuadorian labor law has very weak protections for freedom of association and numerous loopholes for those protections that do exist.

Ms. Pier made a recommendation based on her investigation in Ecuador: that the proposed database include not only the conventional measures of freedom of association but also some mechanism for identifying the existence of a climate of fear among workers that inhibits attempts at union organizing.

Bipul Chattopadhyay, presenter

The Consumer Unity & Trust Society (CUTS) was founded in 1983. Its mission is to promote consumer protection, economic equity, and social justice through research and advocacy. CUTS operates four centers in India and one in Africa, with a budget that exceeds $4 million and a staff of more than 65 persons. Funding comes from membership subscriptions, sales of publications, research contracts, and donations from noncommercial organizations.

Mr. Chattopadhyay contends that child labor is not only a phenomenon of the developing world; there are numerous studies showing its existence among industrialized nations as well, although its causes tend to be far different. In India, child labor is a structural part of many, though not all, industries, and the extent of its usage varies across regions. This is not surprising; the presentations at the New York City Forum suggested, both directly and indirectly, that violations of ILS are typically industry- and geographic-specific. Mr. Chattopadhyay stressed that child labor is not a choice of either the children or their parents. Studies by his organization— and some western academics as well—indicate that child labor is driven first and foremost by a lack of financial resources. For the parents it is simply a matter of physical survival, not a question of whether their children should work or go to school. The second driving force is the lack of

educational opportunities. Indian government expenditures on education are very low, and schools either do not exist or are so poorly equipped and staffed that the educational experience is meaningless.

If indeed child labor is not a “free will” choice in the developing world, then the application of trade sanctions through the linkage of trade and labor rights is not only ineffective but harmful to the very sector of society it is intended to benefit. By definition, trade sanctions affect only the tradable goods sector, which accounts for only a small proportion of the child labor problem. In all likelihood, trade sanctions would force children to accept lower paid jobs in the nontradable goods sector or, more likely, in the informal economy, both of which would probably have jobs with even worse working conditions than those being eliminated. Mr. Chattopadhyay argued that the World Trade Organization (WTO) should not incorporate labor rights provisions into its trade agreements. The best way to eliminate child labor is to foster rapid economic development, in part through the elimination of trade barriers in the developed world against labor-intensive products produced in the south, and to take steps to assist governments in the task of enforcing already existing labor laws, which in many cases are as stringent as those in the West.

Rev. David Schilling, presenter

The Interfaith Center on Corporate Responsibility (ICCR), founded in 1971, is a coalition of 275 institutional investors from various religions. ICCR’s primary goal is to change corporate programs and practices so that they are better aligned with the social, human rights, and environmental policies espoused by ICCR members. To accomplish this, the ICCR works closely with unions, labor rights groups, and NGOs.

Rev. Schilling maintained that governments and international organizations have a critical role to play in enforcing ILS because enterprise management efforts in this regard have generally been lacking or ineffective. To this end, the ICCR’s Global Corporate Accountability Program attempts to get companies to adopt codes of conduct for their supply chain, pay a living wage, and adopt human rights policies based on the ILO’s core labor standards. Growing public awareness of the labor rights issue in recent years has occurred because of consumer and student campaigns, press reports,

and the activities of socially responsible institutional investors and companies themselves. But there remains a great deal of work to be done; labor rights violations are occurring at this very moment, and this fact should spur action on a number of fronts.

First, corporate codes of conduct need to be strengthened, in particular through the addition of ILO Conventions 87 and 98 on freedom of association and collective bargaining. A study conducted in the late 1990s found that of 120 corporate codes surveyed, fewer than 10 percent included provisions concerning freedom of association. Even more disturbing, some codes that do include freedom of association define it in such a way as to emasculate the concept. Second, workers need to be involved in the process of formulating, monitoring, and enforcing ILS and codes of conduct, and, to this end, they should receive training and education similar to that accorded factory managers. The top-down approach of corporate codes of conduct needs to be balanced through the involvement of workers.

Third, monitoring should include local civil society groups because they operate in the communities where factories are located and thus are more acutely attuned to the issues confronting workers and their representatives. Such participation by local groups can help overcome compliance slippage. It is not uncommon for an external monitor to identify a problem and then agree with factory management on a remediation plan; but a subsequent follow-up visit finds that the problem still exists. Such

compliance slippage could be reduced if local groups were involved in the process.

In addition, Rev. Schilling noted that it is important that monitoring in general seek not only to point out problems and judge whether plants pass a test but also to build up the capabilities of governments and civil society to enforce labor codes. Compliance monitoring is good at pointing out deficiencies in factory management vis-à-vis labor rights issues, but it is the role of government to implement and enforce its labor laws.

Rev. Schilling’s final point was that the end results of monitoring must be transparent and that it is critical that the National Academies project handle the transparency issue correctly. The reporting of companies on compliance and social responsibility has been very disappointing to date, and this must change. Reports should include meaningful quantitative goals demonstrating compliance progress, a focus on the core international labor standards, and information on the following points:

• the monitoring system used and the specifics of its methodology;

• the number of subcontractors;

• the size of the internal and external (if applicable) monitoring staffs;

• the number of facilities audited;

• the frequency of audits, the pass/fail rate, and the reasons for failure;

• the findings;

• remediation efforts undertaken; and

• any measurable goals that were set.

It is also important for institutional investors to be able to compare the performance of companies. This means that there must be an effort to standardize company reporting, much like that in finance. There are a number of initiatives that are working on public reporting standards, including the Global Reporting Initiative.

Tom Hayden, presenter

The Campaign for the Abolition of Sweatshops and Child Labor is a new and growing coalition of religious, labor, student, human rights, civil

rights, women’s, and community organizations that believe that workers’ rights are human rights. The Campaign seeks to enact national legislation at home to protect workers abroad.

Mr. Hayden recalled that during the past century, there have been periodic upsurges in social unrest that have heralded coming change in the economic and political arenas. Mr. Hayden noted the agrarian/populist movements of 1890–1910, the labor unrest of the 1930s, and the social responsibility and democratic movements of the 1960s. Many, if not all, of these reform movements were resisted by business organizations on the basis that a reliance on free market forces alone was the best remedy for social and economic ills; government intervention would not just fail to solve the problems at hand, it was claimed, but would exacerbate them.

For example, one assertion of those groups opposed to ILS is that the enforcement of the ILO’s core labor standards will interfere with the free functioning of the labor market, resulting in lower aggregate welfare among those least able to afford it, that is, those in the developing world. In addition, opponents of the enforcement of labor rights often argue that all industrialized countries went through periods where working conditions were poor, and thus there is no need for action to ameliorate poor working conditions abroad as this is simply a necessary stage of development through which all countries must pass. This market fundamentalism and mythological view of American economic development has been proven wrong time and time again, and this will also prove to be the case with respect to ILS.

There is little question that the continuation of globalization is inevitable, but it remains unclear as to exactly what rules will ultimately govern the process and the relations between the various stakeholders. The first set of rules has been written by business, but this likely will change. Because it appears that governments will not enforce internationally agreed-upon labor standards, it is imperative that this task be taken up by workers, their organizations, and civil society groups. To make progress in this effort, greater transparency of company actions and the conditions under which workers toil in foreign factories must be achieved. In addition, the governments in first-world countries should ban all products produced in sweatshops and shift public procurement to goods produced under decent working conditions. When large amounts of money are designated for buying only goods made under decent working conditions, real progress will be made on combating violations of ILS.

Garrett Brown, presenter

The Maquiladora Health and Safety Support Network is a volunteer network of 400 occupational health and safety professionals who have placed their names on a resource list to provide information, technical assistance, and onsite instruction regarding workplace hazards in the 3,000 “maquiladora” (foreign-owned assembly) plants along the U.S.–Mexico border.

Mr. Brown argued that the optimal paradigm for addressing health and safety matters is a joint effort of management, labor, and government— with management committing the necessary resources and devising the appropriate organizational structure, workers being informed and trained and empowered to act, and government adopting regulations and allocating enough resources for enforcement. But the advance of globalization has severely undermined this framework and has led to a marked downward shift in health and safety standards around the world. Management is under tremendous financial pressure, is continually searching for less expensive production locations, and is no longer willing to invest in safety and health; governments are terrified of chasing away foreign investment and thus are no longer willing to enforce health and safety laws; and workers lack union representation and other avenues for participating in management decisions about working conditions.

Declining health and safety standards worldwide have been mirrored by declining economic and social well-being. Understanding this economic and political macro-context is crucial to the evaluation of ILS and the likelihood that they will ever be adopted and implemented. The push for ILS has been driven by NGOs; they have spurred the corporate social responsibility movement and the adoption of codes of conduct. Mr. Brown believes that the effective implementation of ILS requires that companies and governments be forced to fulfill their legal and ethical responsibilities and that NGOs be strengthened in order to monitor and remedy violations.

There remain serious economic and political hurdles to the adoption and implementation of ILS. Foremost are the failures of companies and governments to meet their legal responsibilities. If NGOs—and thereby the expression of civil society that they represent—are strengthened, they will be able to pressure both companies and government. What do companies have to do in order to achieve better health and safety worldwide? They must dedicate adequate resources to health and safety issues, adopt the most forward-thinking health and safety standards and monitoring practices, and nurture the health and safety infrastructure where they operate. As for governments, they must update regulations, devote resources to enforcement, muster the political will to act, and adopt an upward harmonization platform for negotiating trade and investment agreements.

Stephen Coats, presenter

The U.S./Labor Education in the Americas Project (US/LEAP), founded in 1987, is an independent nonprofit organization dedicated to supporting the labor rights of workers in the Americas who are employed either directly or indirectly by U.S. companies. US/LEAP collaborates with unions, religious institutions, and civil rights and student groups to achieve this goal; US/LEAP’s primary sources of funds are donations from foundations, unions, religious groups, and individuals.

US/LEAP monitors and reports on labor rights problems in the Americas, pursuing concrete progress for workers, either at the factory, industry, or country level. US/LEAP is not interested in research for its own sake but rather as a means of obtaining information that can be used to change the reality on the ground for workers. Most of its industry experience has been in the apparel, banana, and coffee sectors. In terms of ILS, most of its efforts have focused on freedom of association and wages, hours, and benefits; child labor and discrimination are not within its area of expertise, and forced labor is not a major issue in the countries in which it works.

Mr. Coats noted that there is a dearth of surveys and written documentation on labor standards in Latin America. This means that when US/ LEAP investigates a labor rights problem, it must undertake extensive in

terviews and direct communications with workers, trade union leaders, labor lawyers, local NGOs, employers, and local government officials. Of course, legal documents, reports from local NGOs, and company and union materials are reviewed when available. To get a broad picture of a country’s labor law and practice, US/LEAP reviews the U.S. State Department’s annual Country Reports on Human Rights Practices and ILO publications, and consults with the labor attachés in the U.S. embassies in the region on issues such as labor law, judicial reform, and enforcement.

The most extensive US/LEAP reports have been GSP workers’ rights petitions, and these can be very time-consuming, involving a variety of methods and sources of information. In Guatemala, for example, one petition required two to three months of staff time to prepare, in addition to field research by local and U.S. delegations. Trade union contacts provided background material on specific cases, as well as more general information on the judiciary and labor law enforcement. In addition, through their contacts, unions were able to obtain government information that was otherwise not readily available, such as the number of pending applications for union recognition and the length of time they had been pending, the number of collective bargaining cases pending before labor courts, and so on. Interviews with officials in the labor ministry provided a means to verify information from trade unions and other parties.

When examining a specific sector or workplace, US/LEAP has found that NGOs are good sources of information. The Commission for the Verification of Corporate Codes of Conduct and HRW have issued extensive reports on the coffee and banana industries. The industry being examined determines in part the methodology for collecting data; for example, there are very few unions in the coffee industry and thus information is scarce, while the banana industry is more unionized, and some of the companies (such as Chiquita) issue social responsibility reports. In the maquiladora sector, maquila industry associations and governments provide a fair amount of general information, and local and international NGOs are issuing a growing number of reports on conditions of work at specific workplaces. But there is a general absence of reporting on freedom of association at the factory level in the maquila sector because gathering this information is difficult, time-consuming, and expensive. One exception was the HRW report in 1997 that led Phillips-Van Heusen to negotiate a union contract. This report required extensive interviews with management and labor, as well as an extensive review of government, employment, and financial records.

Gathering data and interpreting it are difficult tasks, especially in developing countries where the data collection systems are often rudimentary. For instance, while it is easy in most countries to get information on the minimum wage, it is far more arduous to get reliable data on what wages and benefits are actually paid. Problems in interpretation can be acute. Central America’s maquiladora sector, for example, is almost completely nonunion despite a decade of active organizing efforts. If this is attributed to management’s union-busting, it represents a serious breach of the right to freedom of association; but if it’s attributed to management’s enlightened human resource policies and/or union ineffectiveness, a violation of freedom of association would not be indicated. Complicating the issue in Central America are criminal justice systems that routinely fail to prosecute management-sponsored violence against trade union organizers. Thus, a conclusion that low levels of unionization are the result of trade union apathy or ineffectiveness can be made only after an examination of how the criminal justice system operates. This means that monitoring freedom of association and collective bargaining must include assessments of the criminal justice system.

Cross-national comparisons, although rife with difficulty, can sometimes shed light on a particular issue. For example, in Ecuador fewer than 1 percent of banana workers are unionized, while in Colombia and Honduras nearly 90 percent are unionized, even though wages and working conditions are inferior in Ecuador. This should raise a red flag in the interpretation process, and, in fact, it is clear that freedom of association is not being respected in the Ecuadorian banana sector.

Mr. Coats noted a number of obstacles to monitoring and reporting. The lack of reliable written information and documentation places a premium on labor-intensive interviews and field research, all of which are time-consuming and expensive. Site visits are next to impossible in the agricultural sector, and this limits the usefulness of field research. Local trade unions rarely have the capacity (financial and otherwise) to provide detailed and consistent information, and labor lawyers are few and far between.

Finally, Mr. Coats addressed the state’s responsibility in enforcing compliance with ILS. Clearly, the ultimate responsibility for compliance rests with the state. Codes of conduct are useful because they bring improvements to workers’ lives, but they risk privatizing compliance, and implementing them requires enormous investment on the part of employers. Efforts to improve compliance, whether by the state or through private

codes of conduct, should focus on the industry level. Otherwise, those companies that do not correct labor rights violations could gain a competitive advantage over those that do. A similar argument holds for enforcing labor rights across national borders. In both cases, the responsibility lies with governments or international bodies, which alone have the power to impose sanctions.

US/LEAP has found the threat of lost trade privileges under the GSP program to be the best means to improve labor rights compliance in Guatemala. Sweatshop campaigns, codes of conduct, and ILO complaints have not been nearly as effective a motivator as the potential loss of trade privileges.

Dennis Smith, presenter

The Commission for the Verification of Corporate Codes of Conduct (COVERCO) is an independent, nonprofit monitoring group that focuses on businesses that operate in Guatemala. It was formed in 1997 by a group of professionals active in Guatemalan civil society with expertise in the areas of law, business administration, sociology, communication, education, and religion. COVERCO employs monitors to regularly document working conditions, inspect working environments, interview workers and management, and conduct financial audits.

COVERCO is actively involved in discussions around the world concerning what form of monitoring is best and how such monitoring should be conducted. Although there is room for disagreement on technical issues, it is clear that independent, external groups provide the most accurate and reputable monitoring. Internal compliance programs have the almost insurmountable problem of credibility with consumers and advocacy groups. Governments, especially in the developing world, often lack the financial means, political will, and technical expertise to meaningfully enforce their own labor laws.

To maintain credibility, a monitor must comply with certain basic rules. First and foremost, access to workers, the worksite, payroll records, and workers’ files must be unrestricted. Second, a monitoring group must have complete and total editorial control over the reports it issues. Third, the audit should be carried out over a period of time, not just in a single visit. In its analysis, COVERCO applies the most stringent criteria as reflected in national law, international law, company codes, and factory codes.

Adhering to these three rules does not mean that a monitoring exercise will be successful, however, because the list of potential violations is long. Mr. Smith noted the most frequent violations that COVERCO comes across:

• noncompliance with legally mandated wages, bonuses, and benefits, and confusion among workers concerning the calculation of wages, bonuses, and benefits;

• excessive and forced overtime;

• sexual and physical abuse of workers;

• active employer resistance to union organizing; and

• health and safety issues.

In addition to a failure to uncover actual violations, a monitoring exercise can be derailed in a number of other areas. These include securing follow-through on remediation plans; ensuring that workers and factory management understand their rights and responsibilities under international labor standards; and maintaining independence from the firms when monitors charge for an auditing service.

It is clear from the experience of COVERCO and from discussions with many other institutions involved in monitoring compliance with codes of conduct that a number of things must occur before global compliance with ILS will dramatically improve. Asian governments, businesses, and

labor movements, as well as the “big box” retailers in the United States and Europe, must join in the effort to eliminate violations of core labor standards. There needs to be a concerted effort to develop comparable monitoring methodologies and uniform reporting standards. The confusion that reigns at the moment needlessly complicates what is already a convoluted issue. Without comparable and reliable information on which to base their decisions, consumers will find it increasingly difficult to factor labor rights issues into their choice of products.

Finally, there are certain issues, such as freedom of association, that are subject to differing interpretations in different cultures, and this raises the question of how to handle such variation in the database. Relationships on the shop floor are driven not only by economic and political forces and legal regimes but also by deep-seated cultural and social realities. The question then becomes, should the database incorporate cultural factors into its analysis and, if so, how can this be done?

May Wong, presenter

The Asia Monitor Resource Center (AMRC) is a nonprofit organization based in Hong Kong and focuses on labor issues in the region. Its main goal is to support democratic and independent trade unions in Asia. To accomplish this, it publishes reports, holds conferences, and works with other groups in the region to monitor compliance with ILS in factories in Asia.

Ms. Wong identified three major problems with monitoring as it is currently practiced in China. First, factory workers are inadequately educated about their rights. Frequently however, companies offer training about workers’ rights and company codes of conduct to their own monitors or to factory owners and managers. The International Council of Toy Industries is now promoting a unified code that calls for education and training of factory owners and managers. This is not sufficient, however, to ensure compliance with codes for two reasons. First, factory managers have become adept at falsifying records and obscuring the true nature of working conditions from even well-trained external auditors; falsification of records of hours of work and wages is especially serious. Second, in some cases, the factory owners and managers receiving this training are the same individuals responsible for falsifying records and concealing the truth. Workers on the factory floor must be trained and educated about their rights as set forth in codes of conduct. If this is done, workers would be an excellent source of information about compliance with labor standards. One company that is doing this is Reebok, a U.S. footwear company.

Second, the cost of monitoring is often beyond the means of small- and medium-sized factories, especially when the price demands of large multinational corporations (MNCs) are such that operating margins are very small. In the toy industry, it is not unusual for U.S. and European companies to demand that a factory have SA8000 certification, but the cost of obtaining this certification will often eliminate any profit the factory might make from production. Thus, a system must be established to pay for monitoring compliance that does not result in serious financial harm to factories.

Third, because auditors often lack proper training in labor relations and labor rights, they are likely to fail to recognize violations of core labor standards. Auditors must understand the core labor standards and follow a sound methodology in their investigations. For example, auditors should interview employees away from the worksite and conduct unannounced visits. Finally, it is often very difficult to monitor compliance in companies that have numerous layers of subcontractors feeding into the final product. This complexity is compounded by a lack of transparency or the failure of companies to provide enough information on their operations.

Aewha Kim, presenter

In conducting its monitoring and research, the AMRC tries to gather information from all parties that have a stake in how workplaces are managed. Although secondary sources are at times adequate, the AMRC nonetheless places greater weight on interviews with factory workers. These interviews not only provide new information but also serve as a means to verify secondary sources. In this respect, the AMRC has often discovered inconsistencies between the information gathered in worker interviews and that contained in audit reports. In one such instance, an audit report issued by a U.S. MNC highlighted the free health care and lack of overtime in one factory. The interviews conducted by AMRC, however, revealed that these claims were not true. There are difficulties with direct interviews with workers, however, especially with language and cultural barriers and workers’ lack of understanding of their workplace rights.

The AMRC desires to get information directly from employers, but unfortunately many companies deny access or refuse to answer questions. Audit reports done for companies can sometimes be at odds with reality because the auditors fail to understand the nuances of labor–management relations on the factory floor. This problem is compounded by cultural differences. For example, the audit teams of a German-based MNC did not thoroughly investigate the nature of freedom of association; when workers told them that they were members of a union, the auditors took this to mean that freedom of association did exist. They did not ask any questions about whether the union was freely chosen or whether its processes were

democratic. This example illustrates how difficult it is in practice to judge the nature of freedom of association.

Pharis J. Harvey, presenter

The International Labor Rights Fund (ILRF) was founded in 1986 by a coalition of human rights, labor, policy-making, academic, and religious organizations to fight for the rights of workers in international trade through monitoring the enforcement of labor clauses in trade agreements. Through the years, the ILRF has become instrumental in stimulating solutions to the issues and problems of worker rights and labor standards around the world. The primary source of ILRF funding is contributions from organizations and individuals; it does not receive any government funds.

Mr. Harvey argued that the 1980s and early 1990s witnessed numerous successes in tying labor rights to U.S. trade initiatives. In 1984 the GSP was amended to include workers’ rights, and in 1985 the Overseas Private Investment Corporation (OPIC) took a similar step; in 1988 the omnibus trade bill¹ was passed, and it cited repression of workers’ rights as an unreasonable trade practice. In 1994 the North American Free Trade Agreement (NAFTA) went into effect with its side labor accords (although these were

disappointing). All of these efforts had a similar rationale: to ensure that violations of labor rights would not be used to gain an unfair competitive advantage. Initially the ILRF was very active in bringing cases under the GSP and, to a lesser extent, OPIC, but this strategy eventually became unproductive, and few cases have been filed since the mid-1990s. The NAFTA side labor accords, although accorded a great deal of press coverage and play by politicians, are actually quite cumbersome and woefully lacking in remedial power.

These efforts and the more recent rise of codes of conduct and NGO activist and monitoring groups have a common theme—an attempt to substitute for, or move beyond, the authority of national governments to enforce labor standards. The global economy lacks a coherent and permanent governance structure sufficient to address the issues being created by commercial forces that do not recognize political boundaries. At the same time, most governments lack the technical expertise, political will, and financial resources to effectively enforce their own laws in the face of the unrelenting power of global commerce.

The work of the ILRF has benefited greatly from the work of the ILO. In particular, reports from the ILO’s Committee of Experts and Committee on Freedom of Association have been very valuable and are prepared by committees that command wide support. These reports are among the best sources of case law related to compliance with ILS. In addition, they are useful for sorting out the complicated cultural and political nature of cases involving violations of freedom of association. Also of note from the ILO are the two follow-up reports to the 1998 Declaration. In addition to the ILO, the ILRF has found that staff of, and reports from, U.S. embassies are often helpful, as are local, national, and international NGOs, including unions.

Finally, it is critical that the National Academies database be accessible to the public and open to challenge and dialogue from interested parties. This will serve as a peer review process and increase its legitimacy.